Per the latest report from its Federal Statistical Office on May 24, Germany registered economic growth of 0.3% in the first quarter. This was half the level of growth that Europe’s largest economy achieved in the fourth quarter of 2017.
The decline came primarily on the back of a setback in imports, which declined 1.1% for the first time since the second quarter of 2016. Further, the balance of exports and imports hurt overall economic growth by 0.1%.
However, strong overseas demand, low levels of unemployment and surge in industrial production has offset the effects of a reduction in the rate of economic growth. Under such conditions, betting on stocks from the Deutschland seems prudent.
Dip in Economic Growth Just a Blip
Economists have downplayed such a decline and termed it a blip, blaming it on a higher-than-usual number of holidays, a flu epidemic and a large number of strikes in Germany. Notably, the current figures mark Germany’s 15th quarter-on-quarter growth on the trot, the longest such phase since 1991. Moreover, the Deutschland witnessed a calendar-adjusted year-over-year growth of 2.3%.
Healthy domestic demand also drove economic growth. The gross fixed capital formation in machinery and equipment rose 1.2% and that in construction rose2.1%. Further, household final consumption expenditures increased 0.4%. Lastly, strong global demand, and rising domestic employment and wage levels boosted Germany’s growth in the first quarter.
Steady Rise in Industrial Production and Upbeat Labor Market
Per the latest report from Federal Statistics Office on May 7, Germany’s industrial production rose 1% in March. This marked its biggest gain in the last four months and was achieved on a steady increase in exports. Exports increased at a seasonally adjusted rate of 1.7%.
The labor market has remained intact in Germany in recent months. The jobless rate in the country dipped to a seasonally-adjusted 5.3% last month. Moreover, leading economic institutes in Germany stated that they expect the number of people employed to surge to 44.9 million in 2018 from 44.3 million in 2017, with the overall unemployment rate dropping to as low as 5.2%.
4 Solid Stocks
Strong labor market conditions, steadily increasing industrial production and robust global demand gave Germany’s economic growth a boost in the first quarter.
In this context, we have selected four stocks that are expected to gain from Germany’s economic resilience. These four stocks carry a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
SAP SE (SAP - Free Report) is a provider of enterprise software services and analytics and business intelligence solutions across the globe.
The company is based out of Walldorf and carries a Zacks Rank #1. The company has expected earnings growth of 4.04% for the current year. The Zacks Consensus Estimate for the current year has improved 1% over the last 60 days.
Bayerische Motoren Werke Aktiengesellschaft (BAMXF - Free Report) is a developer, manufacturer and seller of automobiles across the world.
The company is based out of Munich and carries a Zacks Rank #2. It has expected earnings growth of 16.50% for the current year. The Zacks Consensus Estimate for the current year has improved 1.3% over the past 60 days.
Daimler AG (DDAIF - Free Report) is a developer and manufacturer of passenger cars, trucks, vans, and buses.
The company is based out of Stuttgart and carries a Zacks Rank #2. The expected earnings growth is 2.20% for the current year. The Zacks Consensus Estimate for the current year has improved 0.1% over the past 60 days.
KION GROUP AG (KIGRY - Free Report) is a provider of supply chain and logistic services.
The Zacks Rank #2 company is based out of Frankfurt. The company has expected earnings growth 45.71% for the current year. The Zacks Consensus Estimate for the current year has improved 0.1% over the past 60 days.
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